NEW YORK, July 29 (Reuters) - Oil prices fell on Friday,
headed for a weekly loss after a report showed weak U.S.
economic growth and as Congress kept wrangling ahead of the
Aug. 2 deadline to to raise the government debt ceiling and
avoid default.

The U.S. economy stumbled in the first half, according to
Commerce Department data that showed a weaker-than-expected 1.3
percent growth rate in the second quarter. [ID:nCAT005481]

"The slowdown in second-quarter economic activity has been
confirmed, and the reading will add to concerns about the
remainder of the year," said John Kilduff, partner at Again
Capital LLC in New York.

Two other reports showed business activity in the U.S.
Midwest grew less than expected this month as the labor market
weakened, while U.S. consumer sentiment fell in July to its
lowest point in more than two years. [ID:nN9E7ID003]
[ID:nN1E76S08H]

ICE Brent crude for September LCOU1 fell 66 cents to
$116.70 a barrel by 3 p.m. (1900 GMT), after falling as low as
115.75.

U.S. September crude CLU1 fell $1.74 to settle at $95.70
a barrel, the lowest close in two weeks and with the $94.95
intraday low just above the 200-day moving average of $94.88 a
barrel.

U.S. crude fell 4.2 percent for the week, snapping a string
of four weekly gains. For the month, front-month crude managed
a 28-cent gain.

U.S. gasoline RBc1 and heating oil HOc1 futures also
slipped on Friday as front-month August contracts expired.

Trading volumes remained tepid, with Brent and U.S. crude
volumes both below 30-day averages.

The Reuters-Jefferies CRB index .CRB, a global
commodities benchmark fell 0.7 percent as investors fretted
over the U.S. economy and the likelihood of default.

U.S. stocks fell, but pared losses after the S&P 500
briefly fell below its own 200-day moving average. [.N]

Europe's sovereign debt problems remained in focus as
ratings agency Moody's put Spain on review for a possible
downgrade. [ID:nLDE76S04W]

Moody's action was significant for markets because, "Spain
is a big country. Greece is a small country - we can bail them
out, but Spain is another story," Thorbjorn Bak Jensen, analyst
at Global Risk Management, said.

A day after producers started reducing oil and natural gas
output in the Gulf of Mexico as Tropical Storm Don headed
toward the Texas coast, some production platforms were being
restaffed. [ID:nWEN6505]

Tropical Storm Don is expected to hit the Texas coast late
on Friday or on Saturday, the U.S. National Hurricane Center
said. [ID:nEMS4TKKG6]

Nearly 12 percent of U.S. Gulf of Mexico crude output
remained shut on Friday, according to government data, but
analysts believe the storm's relative weakness and projected
path made prolonged production outages or energy infrastructure
damage unlikely. [ID:nEIA001020]

A tropical wave accompanied by a well-defined low pressure
system in the central Atlantic had a medium, 30 percent chance
of becoming a tropical cyclone during the next 48 hours, the
NHC said. [ID:nL3E7IT3BG]
(Additional reporting by Gene Ramos in New York, Claire
Milhench in London and Florence Tan in Singapore; Editing by
David Gregorio and Sofina Mirza-Reid)